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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant ☒
Filed by a party other than the Registrant ☐
Check the appropriate box:

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to Section 240.14a-12
FABRINET
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than
the Registrant)
Payment of Filing Fee (Check all boxes that apply):
No fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT
2023
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NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS
Annual Meeting Date and Time
Tuesday, December 12, 2023 at 9:00 a.m. Pacific Standard Time
Location and Meeting Admission
We have adopted a virtual format for our 2023 Annual Meeting of Shareholders (the “Annual Meeting”) to provide a consistent experience to all our shareholders regardless of location. There will be no physical location for shareholders to attend the Annual Meeting.
You are entitled to attend the Annual Meeting online, vote and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/FN2023 and entering the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, voting instruction form or proxy card (if you requested printed materials). You will only be entitled to vote and submit questions at the Annual Meeting if you are a shareholder as of the record date.
More details on how to participate in this year’s virtual meeting can be found in the section of the accompanying proxy statement entitled “Questions and Answers about the Annual Meeting and Procedural Matters.”
In the event of a technical malfunction or other situation that at the discretion of the Chairman of the Board of Directors may affect the ability of the Annual Meeting to satisfy the requirements for a meeting of shareholders to be held, the Chairman or Corporate Secretary of Fabrinet will convene the meeting at 11:00 a.m. Pacific Standard Time on the same date and at the website specified above solely for the purpose of holding the adjourned meeting at this later time.
Items of Business
1.
Elect two Class II directors named in the proxy statement and recommended by Fabrinet’s board of directors to serve for a term of three years and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal;
2.
Ratify the appointment of PricewaterhouseCoopers ABAS Ltd. as Fabrinet’s independent registered public accounting firm for Fabrinet’s fiscal year ending June 28, 2024;
3.
Hold a non-binding, advisory vote to approve the compensation of Fabrinet’s named executive officers, as disclosed in the proxy statement;
4.
Hold a non-binding, advisory vote to determine shareholders’ preferred frequency of holding future advisory votes to approve the compensation of Fabrinet’s named executive officers; and
5.
Conduct any other business as may properly come before the meeting or any adjournment or postponement thereof.
These items of business are more fully described in the proxy statement accompanying this notice. Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above, or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
Record Date
Only shareholders of record at the close of business on October 17, 2023 are entitled to notice of, and to vote at, the Annual Meeting or any postponement or adjournment thereof.
Voting
Your vote is very important. Even if you plan to attend the Annual Meeting online, we encourage you to read the proxy statement and submit your proxy or voting instructions as quickly as possible, to ensure your vote is recorded. For specific instructions on how to vote your shares, please follow the procedures outlined in your Notice of Internet Availability of Proxy Materials, or refer to the section of the proxy statement entitled “Questions and Answers About the Annual Meeting and Procedural Matters.”

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If you have any questions or require any assistance with completing your proxy, please contact Kingsdale Advisors by telephone at (866) 228-3049 (toll-free within North America) or (416) 867-2272 (call collect outside North America), or by email at contactus@kingsdaleadvisors.com.
Thank you for your ongoing support of Fabrinet.
 
By order of the Board of Directors,
 
/s/ David T. Mitchell
 
David T. Mitchell
Chairman of the Board of Directors
Grand Cayman, Cayman Islands
October 24, 2023
 
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting
of Shareholders to Be Held on Tuesday, December 12, 2023
The proxy statement and our Fiscal 2023 Annual Report to Shareholders are available at www.proxyvote.com.

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2023 PROXY STATEMENT SUMMARY
2023 Annual Meeting
Date:
Tuesday, December 12, 2023
Time:
9:00 a.m. Pacific Standard Time
Location:
Online via the Internet at www.virtualshareholdermeeting.com/FN2023
Record Date:
October 17, 2023
Voting:
Shareholders as of the record date are entitled to vote. Shareholders may cast one vote for each ordinary share held by them as of the record date on all matters properly presented at the Annual Meeting. At the close of business on the record date, there were 36,330,858 ordinary shares outstanding and entitled to vote at the Annual Meeting, as well as 3,100,494 ordinary shares outstanding and held as treasury shares (which are not entitled to vote).
Admission to Meeting:
You are entitled to attend the Annual Meeting online, vote and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/FN2023 and entering the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, voting instruction form or proxy card (if you requested printed materials). You will only be entitled to vote and submit questions at the Annual Meeting if you are a shareholder as of the record date.
Matters to Be Voted on at the Annual Meeting
Matter
Board
Recommendation
Page Reference for
More Information
Proposal 1:
Election of two Class II directors
FOR” each
nominee
Page 14
Proposal 2:
Ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as Fabrinet’s independent auditor for the fiscal year ending June 28, 2024
FOR
Page 30
Proposal 3:
Advisory vote to approve named executive officer compensation
FOR
Page 31
Proposal 4:
Advisory vote to determine preferred frequency of holding future advisory votes to approve named executive officer compensation
To hold future advisory votes every “1 YEAR
Page 32
Class II Director Nominees: Terms to Expire in 2026
Name
Director Since
Experience and Qualifications
Board Committees
Seamus Grady
2017
CEO experience and deep industry knowledge
None
Thomas F. Kelly
2010
Extensive managerial and operational experience; audit and financial reporting expertise
Audit (Chair)
Compensation
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2023 PROXY STATEMENT SUMMARY
Business and Financial Highlights
In 2023, we achieved our third successive fiscal year of record revenue, net income and net income per diluted share. During fiscal 2023, we also repurchased 488,477 ordinary shares under our share repurchase program for an aggregate purchase price of $47.6 million, which offset dilution from issuances under our equity incentive plans.
The following table illustrates select fiscal 2023 and fiscal 2022 results, as well as the closing share price of our ordinary shares following announcement of our fiscal 2023 and fiscal 2022 year-end results:
Fiscal 2023(1)
Fiscal 2022
% Change
Revenue
$2,645.2 million
$2,262.2 million
16.9%
GAAP gross margin
12.7%
12.3%
3.3%
Non-GAAP gross margin(2)
13.0%
12.6%
3.2%
Operating margin
9.5%
9.0%
5.6%
Non-GAAP operating margin(2)
10.8%
10.3%
4.9%
Net income
$247.9 million
$200.4 million
23.7%
Non-GAAP net income(2)
$282.7 million
$229.2 million
23.3%
Net income per diluted share
$6.73
$5.36
25.6%
Non-GAAP net income per diluted share(2)
$7.67
$6.13
25.1%
Closing share price (on business day following announcement of fiscal year-end results)
$153.66
$115.75
32.8%
(1)
Please see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for our fiscal year ended June 30, 2023 (filed with the Securities and Exchange Commission on August 22, 2023), for a more detailed discussion of our fiscal 2023 financial results.
(2)
Please refer to Appendix A for a reconciliation of this non-GAAP financial measure to the most directly comparable financial measure calculated in accordance with generally accepted accounting principles in the United States (“GAAP”).
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2023 PROXY STATEMENT SUMMARY
Governance Highlights
Our commitment to good corporate governance is illustrated by the following practices:
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Board independence (5 out of 7 directors are independent)
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Separate Chairman and Chief Executive Officer
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Independent directors regularly meet in executive sessions without management present
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Directors attended, on average, 99% of all Board and Committee meetings in fiscal 2023
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Diversity of Board skills and experience
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Annual Board and Committee evaluations
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Strong corporate governance guidelines and policies
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Majority voting director resignation policy for uncontested elections
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Share ownership guidelines for executive officers and directors
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Succession planning process
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Shareholder outreach program
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Board risk oversight and assessment
Board Composition at a Glance
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Director Skills Summary
Our Board members bring diverse experience and perspectives to areas critical to our business. Their collective knowledge ensures appropriate management and risk oversight and supports our strategy of long-term sustainable value creation for shareholders.
Director Name
Executive
Leadership
Industry
Operational
Manufacturing
Finance
Global
Leadership
Business
Development
& Strategy
Information
Security
Other Public
Co. Board
Experience
David T. (Tom) Mitchell
 
Seamus Grady
 
 
Dr. Homa Bahrami
 
 
 
 
Thomas F. Kelly
 
 
Darlene S. Knight
 
 
Dr. Frank H. Levinson
 
Rollance E. Olson
 
 
 
 
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Executive Compensation Program Highlights
Our executive compensation program is designed to be heavily weighted towards compensating our executives based on company performance. To that end, we have implemented executive compensation policies and practices that reinforce our pay-for-performance philosophy and align with commonly viewed best practices and sound governance principles.
What We Do
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Pay-for-performance, with significant portion of compensation at risk
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Caps on performance-based incentive compensation
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Multi-year performance periods
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Clawback policy on cash and equity incentive compensation
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Share ownership guidelines for executive officers and directors
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100% independent directors on the Compensation Committee
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Independent compensation consultant engaged by the Compensation Committee
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Annual review and approval of our compensation strategy
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Engagement with shareholders
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Annual shareholder advisory vote on executive compensation
× What We Don’t Do
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No targeting specific percentiles
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No guaranteed bonus
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No changing of multi-year targets after they are set
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No repricing or buyouts of equity awards
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No share “recycling”
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No short sales, hedging, or pledging of our ordinary shares
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No transactions involving derivatives of our ordinary shares
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No paying dividends or dividend equivalents on unvested equity awards
Shareholder Engagement and Advisory Vote on Executive Compensation
We have conducted shareholder outreach annually since 2016 and have provided shareholders with an annual say-on-pay advisory vote on compensation of our named executive officers since 2012. We are very pleased that shareholders have expressed their continued support of our compensation practices since our 2016 annual meeting of shareholders.
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Pay for Performance
We use a mix of long-term and short-term compensation components to align executive interests with shareholders and attract, retain and motivate executives. Our compensation program is strongly focused on delivering a substantial portion of compensation through performance-based compensation elements. This ensures proper alignment with our shareholders and ties the ultimate value delivered to our named executive officers to Fabrinet’s performance.
For fiscal 2023, target total direct compensation for our named executive officers consisted of annual base salary, target bonus opportunity under our cash-based incentive plan, and the aggregate grant date fair value of time-based and performance-based equity award grants in fiscal 2023 (assuming maximum achievement of performance conditions).
FY23 Target Direct Compensation Mix – CEO
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FY23 Target Direct Compensation Mix – Other NEOs*
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c/o Intertrust Corporate Services (Cayman) Limited
One Nexus Way, Camana Bay
Grand Cayman KY1-9005
Cayman Islands
PROXY STATEMENT
FOR 2023 ANNUAL MEETING OF SHAREHOLDERS
This proxy statement is being provided to holders of ordinary shares of Fabrinet at the close of business on the record date (October 17, 2023) in connection with the solicitation of proxies by Fabrinet’s board of directors (the “Board”) for use at Fabrinet’s 2023 Annual Meeting of Shareholders and any postponement, adjournment or continuation thereof (the “Annual Meeting”), for the purpose of considering and acting upon the matters set forth in this proxy statement and the accompanying notice. The Annual Meeting will be held on Tuesday, December 12, 2023, at 9:00 a.m. Pacific Standard Time via the Internet at www.virtualshareholdermeeting.com/FN2023.
We have adopted a virtual format for the Annual Meeting to provide a consistent experience to all our shareholders regardless of location.
On or about October 24, 2023, we began sending to all shareholders entitled to vote at the Annual Meeting a Notice of Internet Availability of Proxy Materials, which contains instructions on how to access this proxy statement, the accompanying notice of Annual Meeting and form of proxy card.
Information contained on, or that can be accessed through, our website is not intended to be incorporated by reference into this proxy statement, and references to our website address in this proxy statement are inactive textual references only.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
Q:
How can I attend the Annual Meeting?
A:
You are invited to attend the Annual Meeting if you were a shareholder of record or a beneficial owner as of October 17, 2023 (the “Record Date”). Shareholders may participate in the Annual Meeting at www.virtualshareholdermeeting.com/FN2023. Guests will not be able to vote shares or ask questions during the meeting.
If you plan to attend the Annual Meeting online, please be aware of what you will need to gain admission to the meeting, as described below. If you do not comply with these procedures, you will not be able to participate in the Annual Meeting but may view the Annual Meeting webcast as a guest.
To attend online and participate in the Annual Meeting, shareholders of record will need to enter the 16-digit control number included on their Notice of Internet Availability of Proxy Materials or proxy card (if they requested printed materials) to log into www.virtualshareholdermeeting.com/FN2023. Beneficial owners who do not have a control number may gain access to the meeting by logging into their brokerage firm’s website and selecting the stockholder communications mailbox to link through to the Annual Meeting; instructions should also be provided on the voting instruction card provided by their broker, bank, or other nominee. The difference between holding shares as a shareholder of record and as a beneficial owner is described below under “Q. What is the difference between holding shares as a shareholder of record and as a beneficial owner?
We encourage you to access the meeting prior to the start time. Please allow ample time for online check-in, which will begin at 8:45 a.m. Pacific Standard Time. If you have difficulties during the check-in time or during the meeting, we will have technicians ready to assist you with any difficulties you may have accessing the virtual meeting. If you encounter any difficulties accessing the virtual meeting, please call the technical support number that will be posted on the virtual meeting platform’s log in page.
Q:
Can shareholders ask questions during the Annual Meeting?
A:
Yes. Shareholders may submit questions online in advance of, or during, the Annual Meeting.
In advance of the meeting, shareholders may submit questions at www.proxyvote.com after logging in with the 16-digit control number included on their Notice of Internet Availability of Proxy Materials, voting instruction from or proxy card (if they requested printed materials).
During the meeting, shareholders may submit questions through the virtual meeting platform at www.virtualshareholdermeeting.com/FN2023.
We will endeavor to answer as many shareholder-submitted questions as time permits that comply with the meeting rules of conduct. We reserve the right to edit any inappropriate language and to exclude questions regarding topics that are not pertinent to meeting matters or Fabrinet’s business. If we receive substantially similar questions, we may group such questions together and provide a single response to avoid repetition in the interest of time and fairness to all shareholders.
Q:
Who is entitled to vote at the Annual Meeting?
A:
You may vote your Fabrinet ordinary shares if our records show that you owned your shares at the close of business on the Record Date. At the close of business on the Record Date, there were 36,330,858 ordinary shares outstanding and entitled to vote at the Annual Meeting, as well as 3,100,494 ordinary shares outstanding and held as treasury shares (which are not entitled to vote). You may cast one vote for each ordinary share held by you as of the Record Date on all matters presented.
Q:
Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
A:
In accordance with rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the Internet. Accordingly, we began sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our shareholders of record and beneficial owners on or about October 24, 2023.
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All shareholders will be able to access the proxy materials on the website referred to in the Notice, or to request a printed set of the proxy materials. Instructions on how to access the proxy materials over the Internet or to request a printed copy can be found in the Notice. In addition, shareholders may request the proxy materials be sent by mail or email on an ongoing basis. Choosing to receive future proxy materials by email will save us the cost of printing and mailing documents to you and will reduce the impact of our annual meetings on the environment.
Q:
What proposals will be voted on at the Annual Meeting?
A:
The proposals scheduled to be voted on are:
One:
Election of two Class II directors listed in this proxy statement and recommended by the Board to serve for a term of three years and until their respective successors have been duly elected and qualified or until their earlier death, resignation or removal.
Two:
Ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024.
Three:
A non-binding, advisory vote to approve the compensation of our named executive officers, as disclosed herein.
Four:
A non-binding, advisory vote to determine our shareholders’ preferred frequency of holding future advisory votes to approve the compensation of our named executive officers.
Q:
How does the Board of Directors recommend that I vote?
A:
The Board recommends that you vote your shares:
FOR” each of the nominees listed in this proxy statement and recommended by the Board for election as Class II directors (Proposal One).
FOR” the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024 (Proposal Two).
FOR” the approval of the compensation of our named executive officers (Proposal Three).
1 YEAR” as the frequency of holding future advisory votes to approve the compensation of our named executive officers (Proposal Four).
Q:
What is the voting requirement to approve each of the proposals and how are votes counted?
A:
Proposal One. A plurality of the votes cast is required for the election of directors. You may vote “FOR” or “WITHHOLD” on each nominee for election as director. The nominees for director receiving the highest number of affirmative votes will be elected as directors. Abstentions and broker “non-votes” will not affect the outcome of the election. However, as set forth below under the heading “Corporate Governance—Majority Voting Director Resignation Policy in Uncontested Elections,” we have a policy that if a director receives more “WITHHOLD” votes than “FOR” votes in an uncontested election such as this one, the director shall offer his or her resignation for consideration by the Board.
Proposals Two and Three. The affirmative vote of a majority of the votes cast by shareholders present in person (including virtually) or represented by proxy at the meeting and entitled to vote on the applicable proposal is required to (1) ratify the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024, and (2) approve, on a non-binding, advisory basis, the compensation of our named executive officers. You may vote “FOR,” “AGAINST” or “ABSTAIN” on these proposals. Abstentions and broker “non-votes” are not deemed to be votes cast and, therefore, are not included in the tabulation of voting results on these proposals.
Proposal Four. A majority of the votes cast by shareholders present in person (including virtually) or represented by proxy at the meeting and entitled to vote on the proposal is required to determine, on a non-binding advisory basis, our shareholders’ preference regarding the frequency of holding future advisory votes to approve the compensation of our named executive officers. However, in the event that no voting option receives a majority of the votes cast, the Board and the Compensation Committee will consider the voting option that receives the greatest number of votes to be the preference of our shareholders. You may indicate whether you would prefer an advisory vote on executive compensation every “1 YEAR,” “2 YEARS” or “3 YEARS” or you may “ABSTAIN” from voting on the proposal. Abstentions and broker “non-votes” are not deemed to be votes cast and, therefore, are not included in the tabulation of voting results on this proposal.
All shares entitled to vote and represented by properly submitted proxies received prior to the Annual Meeting (and not revoked) will be voted at the Annual Meeting in accordance with the instructions indicated by such
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proxy. If no instructions are indicated on such proxy, the shares represented by that proxy will be voted as recommended by the Board.
Q:
How many shares must be present or represented to conduct business at the Annual Meeting?
A:
The presence of the holders of at least one-third of the total shares entitled to vote at the Annual Meeting is necessary to constitute a quorum at the Annual Meeting. Such shareholders are counted as present at the meeting if (1) they are present virtually at the Annual Meeting or (2) have properly submitted a proxy. Abstentions and broker “non-votes” are counted as present and entitled to vote and are, therefore, included for the purposes of determining whether a quorum is present at the Annual Meeting. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner, and the broker does not have, or declines to exercise, discretionary authority to vote those shares.
Q:
How can I vote my shares during the Annual Meeting?
A:
Shareholders of record may vote their shares electronically during the Annual Meeting by logging into www.virtualshareholdermeeting.com/FN2023.
Beneficial owners may vote their shares electronically during the Annual Meeting only if they obtain a “legal proxy” from the broker, bank or nominee that holds the shares giving the beneficial owner the right to vote the shares. Voting online during the meeting will replace any previous votes. Even if you plan to attend the Annual Meeting, we recommend you also submit your vote as described in the Notice and as described below, so your vote will be counted even if you later decide not to attend the meeting.
Q:
How can I vote my shares without attending the Annual Meeting?
A:
Whether you hold shares directly as the shareholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. If you are a shareholder of record, you may vote by submitting a proxy; please refer to the voting instructions in the Notice or below.
If you hold shares beneficially in street name, you may vote by submitting voting instructions to your broker, bank or nominee; please refer to the voting instructions provided to you by your broker, bank or nominee.
By Internet – Shareholders of record with Internet access may submit proxies until 11:59 p.m., Eastern Standard Time, on December 11, 2023, by following the “Vote by Internet” instructions described in the Notice, or by following the instructions at www.proxyvote.com. Most Fabrinet shareholders who hold shares beneficially in street name may vote by accessing the website specified in the voting instructions provided by their brokers, trustees or nominees. If you are a beneficial owner, please check the voting instructions provided by your broker, trustee or nominee for information regarding Internet voting availability.
By telephone – Depending on how your shares are held, you may be able to vote by telephone. If this option is available to you, you will have received information with the Notice or the voting instructions provided by your broker, bank or nominee explaining this procedure.
By mail – Shareholders of record may request a paper proxy card from Fabrinet and indicate their vote by completing, signing and dating the card where indicated and by returning it in the prepaid envelope that will be included with the proxy card. Please follow the procedures outlined in the Notice to request a paper proxy card.
We may use the Broadridge QuickVote™ service to assist beneficial shareholders with voting their shares over the telephone. Alternatively, Kingsdale Advisors may contact beneficial shareholders to assist them with conveniently voting their shares directly over the phone. If you have any questions about the Annual Meeting, please contact Kingsdale by telephone at (866) 228-3049 (toll-free in North America) or (416) 867-2272 (call collect outside North America), or by email at contactus@kingsdaleadvisors.com.
Q:
What is the difference between holding shares as a shareholder of record and as a beneficial owner?
A:
Shareholder of Record. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, you are considered the “shareholder of record” with respect to those shares, and we have sent the Notice directly to you. As a shareholder of record, you have the right to grant your voting proxy directly to us or to a third party, or to vote virtually during the Annual Meeting.
Beneficial Owner. If your shares are held in a brokerage account or by a bank or nominee, you are considered the “beneficial owner” of shares held in “street name,” and the Notice is being forwarded to you by your broker, bank or nominee (who is
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
considered the shareholder of record with respect to those shares). As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares. Your broker, bank or nominee has enclosed or provided voting instructions for you to use in directing the broker, bank or nominee how to vote your shares. You are also invited to attend the Annual Meeting. However, because you are not the shareholder of record, you may not vote your shares virtually during the Annual Meeting unless you obtain a “legal proxy” from your broker, bank or nominee giving you the right to vote the shares at the Annual Meeting.
If you hold your shares through a broker and do not provide your broker with specific voting instructions, your broker will have the discretion to vote your shares only on routine matters. As a result:
Your broker will have the authority to exercise discretion to vote your shares with respect to the ratification of the appointment of PricewaterhouseCoopers ABAS Ltd. as our independent registered public accounting firm for our fiscal year ending June 28, 2024, because the rules of The New York Stock Exchange (“NYSE”) treat that matter as routine.
Your broker will not have the authority to exercise discretion to vote your shares with respect to the election of directors, the advisory vote to approve the compensation of our named executive officers, and the advisory vote to determine the shareholders’ preferred frequency of holding future advisory votes to approve the compensation of our named executive officers because the NYSE rules treat those matters as non-routine.
Q:
What happens if additional matters are presented at the Annual Meeting?
A:
If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named as proxy holders will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.
Q:
Can I change my vote?
A:
Subject to any rules your broker, bank or nominee may have, you may change your vote at any time before the electronic polls close at the Annual Meeting.
If you are the shareholder of record, you may change your vote by (1) granting a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the voting methods described above (and until the applicable deadline for each method), (2) providing a written notice of revocation to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054 prior to your shares being voted, or (3) virtually attending the Annual Meeting and voting online during the meeting. Attending the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically request this.
If you are the beneficial owner of shares held in street name, you may change your vote by (1) submitting new voting instructions to your broker, bank or nominee, or (2) attending the Annual Meeting and voting online during the meeting if you first have obtained a legal proxy from your broker, bank or nominee giving you the right to vote your shares at the Annual Meeting.
Q:
What happens if I decide to attend the Annual Meeting but I have already voted or submitted a proxy card covering my shares?
A:
Subject to any rules your broker, bank or nominee may have, you may attend the Annual Meeting and vote during the meeting even if you have already voted or submitted a proxy card. Any previous votes that were submitted by you will be superseded by the vote you cast at the Annual Meeting. Please be aware that attendance at the Annual Meeting will not, by itself, revoke a proxy.
If a broker, bank or nominee beneficially holds your shares in street name and you wish to attend the Annual Meeting and vote during the meeting, you must obtain a legal proxy from the broker, bank or nominee holding your shares that gives you the right to vote the shares.
Q:
What should I do if I receive more than one set of voting materials?
A:
If you received more than one Notice, voting instruction card or set of proxy materials, your shares are registered in more than one name or brokerage account. Please follow the instructions on each Notice or voting instruction card that you receive, to ensure that all of your shares are voted.
Q:
Is my vote confidential?
A:
Proxy instructions, ballots and voting tabulations that identify individual shareholders are handled in a manner that protects your voting privacy. Your vote
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will not be disclosed either within Fabrinet or to third parties, except: (1) as necessary to meet applicable legal requirements, (2) to allow for the tabulation of votes and certification of the vote, and (3) to facilitate a successful proxy solicitation. Occasionally, shareholders provide written comments on their proxy cards, which may be forwarded to Fabrinet’s management.
Q:
Where can I find the voting results of the Annual Meeting?
A:
We will announce preliminary voting results at the Annual Meeting. We will also disclose voting results on a Form 8-K filed with the SEC within four business days after the Annual Meeting, which will also be available in the “Investors—Financials & Filings—SEC Filings” section of our website at www.fabrinet.com.
Q:
Who will bear the cost of soliciting votes for the Annual Meeting?
A:
We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. We may reimburse brokerage firms, custodians, nominees, fiduciaries and other persons representing beneficial owners for their reasonable expenses in forwarding solicitation material to such beneficial owners. We have engaged Kingsdale Advisors as our shareholder advisor and proxy solicitation agent and will pay fees of approximately $20,500, plus certain out-of-pocket expenses, to Kingsdale to assist us with the solicitation of proxies. Our directors, officers and employees also may solicit proxies in person or by other means of communication. Such directors, officers and employees will not be additionally compensated, but may be reimbursed for reasonable out-of-pocket expenses in connection with such solicitation.
If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur.
Q:
What is the deadline to propose actions for consideration at next year’s annual meeting of shareholders or to nominate individuals to serve as directors?
A:
Shareholders may submit proposals, including recommendations of director candidates, for consideration at future shareholder meetings.
For inclusion in Fabrinet’s proxy materials – Shareholders may present proper proposals for inclusion in our proxy statement and for consideration at our next annual meeting of shareholders by submitting their proposals in writing to our Corporate Secretary in a timely manner. In order to be included in the proxy statement for our 2024 annual meeting of shareholders, shareholder proposals must be received by our Corporate Secretary no later than June 26, 2024 and must otherwise comply with the requirements of Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
To be brought before an annual meeting – In addition, our memorandum and articles of association establish an advance notice procedure for shareholders who wish to present certain matters before an annual meeting of shareholders.
Nominations for the election of directors only can be made (1) by or at the direction of the Board, or (2) by a shareholder who has delivered written notice to our Corporate Secretary within the Notice Period (as defined below) and who was a shareholder at the time of such notice and as of the record date for such meeting. The notice must contain specified information about the nominees and about the shareholder proposing such nominations.
Our memorandum and articles of association also provide that the only business that may be conducted at an annual meeting is business that is (1) properly brought before the meeting in accordance with our proxy materials with respect to such meeting, (2) properly brought before the meeting by or at the direction of the Board, or (3) properly brought before the meeting by a shareholder who has delivered written notice to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054 within the Notice Period (as defined below) and who is a shareholder at the time of such notice and as of the record date for such meeting. The notice must contain specified information about the matters to be brought before such meeting and about the shareholder proposing such matters.
The “Notice Period” is defined as that period not less than 45 days nor more than 75 days prior to the one-year anniversary of the date on which we first mailed our proxy materials or a notice of availability of proxy materials (whichever is earlier) to shareholders in connection with the preceding year’s annual meeting of shareholders. As a result, the Notice Period for the 2024 annual meeting of shareholders will start on August 10, 2024 and end on September 9, 2024.
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QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND PROCEDURAL MATTERS
In addition, to comply with Rule 14a-19 of the Exchange Act, shareholders who intend to solicit proxies in support of director nominees (other than our nominees) at our 2024 annual meeting of shareholders must provide notice to our Corporate Secretary that sets forth the information required by Rule 14a-19 under the Exchange Act no later than October 13, 2024. Please note that the notice requirement under Rule 14a-19 is in addition to the applicable notice requirements under the advance notice provisions of our memorandum and articles of association as described above.
If a shareholder who has notified us of his or her intention to present a proposal at an annual meeting does not appear to present his or her proposal at such meeting, we are not required to present the proposal for vote at such meeting.
A copy of the full text of the provisions of our memorandum and articles of association discussed above may be obtained by writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, or by accessing Fabrinet’s filings on the SEC’s website at www.sec.gov.
All notices of proposals by shareholders, whether or not included in our proxy materials, should be sent to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054.
Q:
How may I obtain a separate set of proxy materials or the Fiscal 2023 Annual Report?
A:
If you share an address with another shareholder, each shareholder may not receive a separate copy of our proxy materials and Fiscal 2023 Annual Report. Upon written request we will promptly send a separate copy of our proxy materials and Fiscal 2023 Annual Report, without charge, to any shareholder at a shared address where a single copy of the documents was delivered. Shareholders may request additional copies of our proxy materials and Fiscal 2023 Annual Report by contacting our investor relations at IR@fabrinet.com, or writing to Fabrinet, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, Attention: Investor Relations. Shareholders who share an address and received multiple copies of our proxy materials and Fiscal 2023 Annual Report can also request to receive a single copy by following the instructions above.
Q:
Whom do I contact if I have questions?
A:
If you have any questions or need assistance completing your proxy or voting instruction form, please contact Kingsdale Advisors by telephone at (866) 228-3049 (toll-free within North America) or (416) 867-2272 (call collect outside of North America), or by email at contactus@kingsdaleadvisors.com.
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FISCAL YEAR END
This proxy statement provides information about the matters to be voted on at the Annual Meeting and additional information about Fabrinet and its executive officers and directors. Some of the information is provided as of the end of our 2021, 2022 or 2023 fiscal years, and some information is more recent. Our fiscal years end on the last Friday of June of each calendar year. Our 2021, 2022 and 2023 fiscal years ended on June 25, 2021, June 24, 2022 and June 30, 2023, respectively. Our 2024 fiscal year will end on June 28, 2024.
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PROPOSAL ONE: ELECTION OF DIRECTORS
General
Our amended and restated memorandum and articles of association provide that the number of our directors will be fixed from time to time by the Board, but may not consist of more than 15 directors. The Board presently consists of seven directors who are divided into three
classes with overlapping three-year terms as set forth below. Upon expiration of the term of a class of directors, directors for that class will be elected for three-year terms at the annual meeting of shareholders in the year in which that term expires.
Class I Directors
(Term Expires in 2025)
Class II Directors
(Term Expires at Annual Meeting)
Class III Directors
(Term Expires in 2024)
Dr. Homa Bahrami
Seamus Grady
Dr. Frank H. Levinson
Darlene S. Knight
Thomas F. Kelly
David T. Mitchell
Rollance E. Olson
 
 
Nominees for Director
Two candidates have been nominated for election at the Annual Meeting as Class II directors for a three-year term expiring in 2026. Upon the recommendation of the Nominating & Corporate Governance Committee, the Board nominated Seamus Grady and Thomas F. Kelly for election as Class II directors. Biographical information for each of the nominees is set forth below.
Each nominee has consented to being named in this proxy statement and to serving as a director if elected, and we have no reason to believe any nominee will be unavailable to serve. In the event Mr. Grady or Mr. Kelly is unable or declines to serve as a director at the time of the Annual Meeting, the proxies will be voted for any
nominee who may be proposed by the Nominating & Corporate Governance Committee and designated by the Board to fill the vacancy.
If you sign your proxy or voting instruction card or vote by telephone or over the Internet, but do not give instructions with respect to the election of directors, your shares will be voted for the two persons recommended by the Board. If you wish to give specific instructions with respect to the election of directors, you may do so by indicating your instructions on your proxy or voting instruction card, or when you vote by telephone or over the Internet. If you do not give voting instructions to your broker, your broker will not vote your shares on this matter.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the election of each of the nominees listed above.
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PROPOSAL ONE: ELECTION OF DIRECTORS
Biographical Information
The names of the members of the Board, their ages, their positions with Fabrinet and other biographical information as of October 17, 2023, are set forth below. A discussion of the qualifications, attributes and skills of each of the directors and the director nominee that led the Board and the Nominating & Corporate Governance Committee to conclude that he or she should serve as a director follows each of the biographies below.
There are no family relationships among any of our directors or executive officers.
See “Corporate Governance Matters” below for additional information regarding the Board.
Committee
Memberships
Other
Public
Co.
Boards
Name
Age
Director
Since
Tenure (Years)
Position with Fabrinet
Independent
AC
CC
NCGC
Nominees for Director
Seamus Grady
56
2017
6
Chief Executive Officer and Director
 
 
 
 
None
Thomas F. Kelly
70
2010
13
Director
Chair
1
Continuing Directors
 
 
 
 
 
 
 
 
 
Dr. Homa Bahrami
68
2012
11
Director
Chair
None
Darlene S. Knight
57
2022
1
Director
 
 
1
Dr. Frank H. Levinson
70
2001
22
Director
Chair
None
David T. (Tom) Mitchell
81
2000
23
Founder and Chairman of the Board
 
 
 
 
None
Rollance E. Olson
80
2004
19
Lead Independent Director
None
AC – Audit Committee
CC – Compensation Committee
NCGC – Nominating & Corporate Governance Committee
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PROPOSAL ONE: ELECTION OF DIRECTORS
Nominees: Terms to Expire in 2026
Seamus Grady
graphic
Mr. Grady has served as our chief executive officer and on the Board since September 2017. Prior to joining us, Mr. Grady served as executive vice president and chief operating officer, mechanical systems division, at Sanmina Corporation, an electronics manufacturing services company, from October 2012 to May 2017. Prior to that, Mr. Grady held various operations roles at Sanmina beginning in 2000, including as senior vice president medical division, from June 2011 to October 2012, and senior vice president global medical operations from March 2009 to June 2011. From 1999 to 2000, Mr. Grady served as director of materials and supply chain management at Lucent Technologies Inc. (formerly Ascend Communications). From 1989 to 1999, Mr. Grady served in a variety of operations roles at Manufacturers Services Limited (now Celestica), an electronic manufacturing and supply chain services company. Mr. Grady holds a B. Tech in Manufacturing Technology from the National University of Ireland, Galway (NUIG).
 
 
 
Among other skills and qualifications, Mr. Grady brings to the Board broad and deep experience in the electronics manufacturing services industry, including overseeing operations at multiple international facilities.
Thomas F. Kelly
graphic
Mr. Kelly has served on the Board since 2010. Mr. Kelly has served as a Venture Consultant for Forgepoint Capital, a venture capital firm, since November 2022. Mr. Kelly served as chief executive officer and president of IDX, a provider of software and services for cyber breach and identity fraud protection, from August 2017 to August 2022. From 2016 to 2017, Mr. Kelly served as a cybersecurity industry consultant. In the prior twenty years, Mr. Kelly was Chief Executive Officer of several software and security companies including AccelOps between 2015 and 2016 (acquired by Fortinet, 2016), Moxie Software, MontaVista Software (acquired by Cavium, 2009), BlueStar Solutions (acquired by Affiliated Computer Services, 2004) and Blaze Software (acquired by Brokat Infosystems AG, 2000). Mr. Kelly has also held executive leadership operating roles at several companies including Epicor Software, Cirrus Logic, Cadence Design Systems, and Frame Technology (acquired by Adobe, 1995). Mr. Kelly has been a member of the board of directors of ZeroFox Holdings, Inc. since August 2022 and was previously a member of the boards of directors of FEI and Epicor Software. He is also on the Board of Regents of Santa Clara University. Mr. Kelly earned a bachelor of science degree in economics from Santa Clara University.
 
 
 
Among other skills and qualifications, Mr. Kelly brings to the Board audit and financial reporting expertise, as well as extensive managerial and operational experience.
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PROPOSAL ONE: ELECTION OF DIRECTORS
Continuing Directors: Terms Expire in 2024
Dr. Frank H. Levinson
graphic
Dr. Levinson has served on the Board since 2001. Dr. Levinson has served as the managing director of Small World Group, a group primarily involved in investing in and growing small companies, since 2006. Dr. Levinson served as the chairman of the board of directors and chief technical officer of Finisar Corporation, a provider of fiber optic components and network performance test and monitoring systems, from August 1999 to January 2006, and remained as a director of Finisar until August 2008. From 1988 to 1999, Dr. Levinson served as the chief executive officer of Finisar. From January 1986 to February 1988, Dr. Levinson served as the optical department manager at Raynet, Inc., a fiber optic systems company and, from April 1985 to December 1985, as the chief optical scientist at Raychem Corporation. From January 1984 to July 1984, Dr. Levinson was a member of the technical staff at Bellcore, a provider of services and products to the communications industry. From 1980 to 1983, Dr. Levinson was as a member of the technical staff at AT&T Bell Laboratories. Dr. Levinson was a member of the boards of directors of TKB Critical Technologies 1, a special purpose acquisition company, from October 2021 to August 2023, and of Interlink Electronics, Inc. from July 2014 to June 2020. Dr. Levinson earned a bachelor of science degree in mathematics and physics from Butler University, and a master’s degree in astronomy and a doctor of philosophy degree in astronomy from the University of Virginia.
 
 
 
Among other skills and qualifications, Dr. Levinson brings to the Board executive leadership and management experience in a global organization and semiconductor industry experience, having served as chairman of the board of directors, chief technical officer and chief executive officer of Finisar Corporation.
David T. (Tom) Mitchell
graphic
Mr. Mitchell is our founder and has served as our non-employee chairman of the Board since June 2018. Mr. Mitchell previously served as our executive chairman of the Board from September 2017 until June 2018, as our chief executive officer and chairman of the Board from our inception in 2000 until September 2017, and as our president from 2000 to January 2011. In 1979, Mr. Mitchell co-founded Seagate Technology, a disk drive manufacturing company. Mr. Mitchell served as the president of Seagate Technology from 1983 to 1991. From 1992 to 1995, Mr. Mitchell served as the chief operating officer of Conner Peripherals, a disk drive manufacturing company. From 1995 to 1998, Mr. Mitchell served as the chief executive officer of JTS Corp., a mobile disk drive manufacturing company. During his tenure in the data storage industry, Mr. Mitchell established manufacturing operations in Singapore, Thailand, Malaysia, the PRC and India. Mr. Mitchell was a member of the board of directors of GigOptix, Inc. from June 2012 through July 2013. Mr. Mitchell earned a bachelor of science degree in economics from Montana State University.
 
 
 
Among other skills and qualifications, Mr. Mitchell brings to the Board extensive knowledge and understanding of Fabrinet’s business, operations and employees, having founded Fabrinet and served on the Board since our inception, as well as more than 30 years of experience in an array of executive management roles within the disk drive and optoelectronics manufacturing industries.
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PROPOSAL ONE: ELECTION OF DIRECTORS
Continuing Directors: Terms Expire in 2025
Dr. Homa Bahrami
graphic
Dr. Bahrami has served on the Board since 2012. Dr. Bahrami is a Senior Lecturer at the Haas School of Business, University of California, Berkeley. She is also a Faculty Director of the Center for Executive Education and a board member of the Center for Teaching Excellence at the Haas School of Business, where she has served on the faculty since 1986. Dr. Bahrami was a member of the board of directors of FEI Company (acquired by Thermo Fisher Scientific Inc. in 2016) from February 2012 through September 2016, where she served on the audit and compensation committees. Dr. Bahrami earned a bachelor of arts degree with honors in sociology and social administration from Hull University and a master of science degree in industrial administration and a doctor of philosophy degree in organizational behavior from Aston University in the United Kingdom.
 
 
Among other skills and qualifications, Dr. Bahrami brings to the Board experience in organizational design and executive development for global enterprises.
Darlene S. Knight
graphic

Ms. Knight has served on the Board since January 2022. Ms. Knight has significant operational and P&L experience with multi-national manufacturing businesses, primarily in the automotive sector, where she has held strategic and operations roles. Ms. Knight most recently served as Vice President, Americas of Adient plc, a global leader in the automotive seating supply industry, from May 2018 to January 2019, and as Vice President, China of Adient from March 2016 to April 2018. Prior to her roles at Adient, Ms. Knight served as Group Vice President and General Manager, Complete Seat Americas of Johnson Controls, Inc., a global diversified technology and industrial company, from October 2013 until February 2016. Ms. Knight also previously served in senior leadership roles at Tecumseh Products Corporation, a manufacturer of commercial refrigeration compressors and condensing unit systems, from 2012 to 2013, and at Edscha GmbH, a Tier 1 automotive supplier, from 2006 to 2012. Ms. Knight served in roles of increasing responsibility at General Motors Corporation from 1984 until 2006. Ms. Knight is a member of the boards of directors of eLeapPower, a privately held corporation, and Reliance Worldwide Corporation Limited, a publicly traded company listed on the Australian Securities Exchange, where she also serves on the ESG and the health & safety committees of the board. Ms. Knight earned a bachelor of science degree in industrial administration from GMI Engineering & Management Institute and a master of science degree in engineering science from Rensselaer Polytechnic Institute.
 
 
 
Among other skills and qualifications, Ms. Knight brings to the Board significant operational and leadership experience with global manufacturing businesses.
Rollance E. Olson
graphic
Mr. Olson has served on the Board since 2004, including as lead independent director since 2011. From 1986 to 2011, Mr. Olson served as chief executive officer of Parts Depot Inc., a wholesale automotive replacement parts and supplies business in Virginia. From 1980 to 1985, Mr. Olson served as the president of Brake Systems, Inc., and from 1973 to 1980, Mr. Olson served in various positions at Bendix Corporation, an automotive safety brake and control systems company, including as general manager of the Fram/Autolite division, general manager of the Bendix automotive aftermarket division and corporate staff consultant. From 1968 to 1973, Mr. Olson served as a management consultant and project leader with Booz, Allen & Hamilton, a management and technology consultant firm. Mr. Olson’s business career started with Honeywell, Inc. in Minneapolis, Minnesota. Mr. Olson also served on the board of directors for several privately owned retail and technology companies. He served as a board member (9 years) and chairman of the board of the largest automotive aftermarket trade association, and was a guest lecturer at the Darden School of Business (University of Virginia). Mr. Olson earned a bachelor of arts degree from the University of Minnesota.
 
 
 
Among other skills and qualifications, Mr. Olson brings to the Board executive leadership and management experience gained from his service as chief executive officer of Parts Depot Inc. for more than 25 years.
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DIRECTOR COMPENSATION
Annual Non-Employee Director Compensation Elements
The Compensation Committee annually reviews director compensation with the assistance of its independent compensation consultant to ensure that it is appropriate and competitive in light of market circumstances and prevailing “best practices” for corporate governance. The compensation elements reflect the Board’s view that compensation to non-employee directors should consist of an appropriate mix of cash and equity awards. The annual non-employee director compensation arrangements described below have been effective since June 25, 2022 (the beginning of fiscal 2023).
Pay Element
Fiscal 2023 Board Compensation for Non-Employee Directors
Annual Retainer (Cash)
All Board Members:
$75,000
Board Chair*:
$200,000
Lead Independent Director**:
$45,000
*Applicable only if the Board Chair is a non-employee director. This retainer was approved by the Board in connection with Mr. Mitchell’s transition in June 2018 from executive chairman of the Board to non-employee Chairman of the Board in light of Mr. Mitchell’s ongoing significant involvement with Fabrinet and the valuable leadership and guidance he provides to Fabrinet.
**Applicable only if the Board Chair is not an independent director.
Committee Member Retainer (Cash)
Audit Committee:
$12,500 (or $33,000 if member is the chair)
Compensation Committee:
$10,000 (or $21,000 if member is the chair)
Nominating & Corporate
Governance Committee:
$6,000 (or $15,000 if member is the chair)
Restricted Share Units (Equity)
Initial Grant*: Upon joining the Board, and effective as of the date an individual becomes a non-employee member of the Board, an award of RSUs, on a prorated basis, to cover a number of Fabrinet’s ordinary shares equal to: $220,000, divided by the closing price of the ordinary shares on the NYSE on the date of grant, and multiplied by the ratio of (i) the number of days beginning with the date the director joins the Board and ending on the day immediately preceding the one year anniversary of the prior year’s annual shareholder meeting, divided by (ii) 365 days, with the resulting number rounded down to the nearest whole share. For the avoidance of doubt, an individual who becomes a non-employee director as a result of ceasing to be an employee will be eligible to receive an Initial Grant.
Annual Grant*: On the date of each annual shareholder meeting and provided that the non-employee director will continue as a Board member following such meeting, an award of RSUs covering a number of Fabrinet’s ordinary shares equal to: $220,000, divided by the closing price of the ordinary shares on the NYSE on the date of grant, with the resulting number rounded down to the nearest whole share.
Vesting: RSUs will be scheduled to vest in full on January 1 following the next annual meeting of shareholders after the applicable date of grant, provided the director continues to remain a service provider to Fabrinet through such date.
*Grants are automatic and nondiscretionary and subject to the terms and conditions of Fabrinet’s 2020 Equity Incentive Plan and form of Restricted Share Unit Agreement previously approved for use under such plan. Any RSUs that vest will be settled in ordinary shares of Fabrinet, and the par value of ordinary shares of Fabrinet issued upon such settlement will be considered to have been paid with past services rendered.
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DIRECTOR COMPENSATION
Fiscal 2023 Director Compensation Table
The following table presents information regarding the compensation earned or paid in fiscal 2023 to individuals who were members of the Board at any time during fiscal 2023, and who also were not our employees. We refer to those directors as non-employee directors. During fiscal 2023, Mr. Grady, our chief executive officer, did not receive additional compensation for his service as a director.
Name
Fees Earned or
Paid in Cash
($)
Stock Awards
($)(1)(2)(3)
All Other
Compensation
($)
Total
($)
Dr. Homa Bahrami
100,000
219,899
319,899
Thomas F. Kelly
118,000
219,899
337,899
Darlene S. Knight
87,500
219,899
307,399
Dr. Frank H. Levinson
108,500
219,899
328,399
David T. Mitchell
275,000
219,899
494,899
Rollance E. Olson
126,000
219,899
345,899
(1)
Reflects the aggregate grant date fair value of the shares in accordance with FASB Accounting Standards Codification Topic 718. The assumptions used in the valuation of these awards are set forth in the notes to our consolidated financial statements, which are included in our Annual Report on Form 10-K for fiscal 2023, filed with the SEC on August 22, 2023. These amounts do not correspond to the actual value that may be realized by the directors.
(2)
On December 8, 2022, each of Dr. Bahrami, Mr. Kelly, Ms. Knight, Dr. Levinson, Mr. Mitchell and Mr. Olson was granted 1,679 restricted share units, all of which are scheduled to vest on January 1, 2024 subject to continued service with us.
(3)
The following table presents the aggregate number of shares underlying unvested stock awards and outstanding options held by each of our non-employee directors as of the last day of fiscal 2023.
Name
Aggregate Number of Shares
Underlying Unvested Stock
Awards
Aggregate Number of Shares
Underlying Outstanding
Options
Dr. Homa Bahrami
1,679
Thomas F. Kelly
1,679
Darlene Knight
1,679
Dr. Frank H. Levinson
1,679
David T. Mitchell
1,679
Rollance E. Olson
1,679
Director Share Ownership Guidelines
Our directors are subject to share ownership guidelines and certain prohibitions on transactions in our securities. For more information, see “Corporate Governance Matters—Share Ownership Guidelines” and “Corporate Governance Matters—Prohibited Transactions in Our Securities.”
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CORPORATE GOVERNANCE MATTERS
Corporate Governance Guidelines
We have adopted Corporate Governance Guidelines that establish the corporate governance policies the Board intends to follow in overseeing our business in accordance with its fiduciary duties.
The Corporate Governance Guidelines are available in the “Investors—Governance” section of our website at www.fabrinet.com.
Code of Business Conduct
We are committed to maintaining the highest standards of ethical conduct, with business practices and principles of behavior that support this commitment. Accordingly, the Board has adopted a Code of Business Conduct, which is applicable to all of our directors, officers (including our principal executive officer and senior financial and accounting officers) and employees.
The Code of Business Conduct is available in the “Investors—Governance” section of our website at www.fabrinet.com. We will disclose on our website any amendments to the Code of Business Conduct, as well as any waivers, required to be disclosed by SEC or NYSE rules.
Majority Voting Director Resignation Policy in Uncontested Elections
The Board endorses the principle of using a majority voting standard for uncontested elections of directors. Accordingly, in an election of directors such as this one, a nominee who receives more “Withhold” votes than “For” votes is expected to promptly tender his or her resignation as a director to the Board for consideration.
After considering any information the Board deems appropriate, the Board will act to accept or reject each tendered director resignation. Any director who tenders a resignation under the majority voting policy may not participate in the action of the Board regarding whether to accept or reject his or her tender of resignation.
Board Leadership Structure
Our Corporate Governance Guidelines provide that the Board will fill the chairman and chief executive officer positions based upon what it believes is in our best interests at any point in time. Mr. Mitchell served in both positions until his retirement as chief executive officer in September 2017. We separated the two roles effective upon this transition, with Mr. Mitchell continuing as executive chairman of the Board from September 2017 until June 2018, and as a non-employee chairman of the Board beginning in June 2018. The Board believes that as our founder and having served as our chief executive officer from our inception until September 2017, Mr. Mitchell is in the best position to direct the focus and attention of the Board on the areas most relevant for us and our shareholders, as Mr. Mitchell is the most familiar with our business, industry and strategic priorities. In the role of chairman, Mr. Mitchell also is able to provide strong and valuable leadership for us both internally and externally.
In addition, our Corporate Governance Guidelines provide that if the chairman is not independent, the Board shall appoint a lead independent director. Mr. Olson has served as our lead independent director since January 2011. The lead independent director’s duties include coordinating the activities of the independent and other non-employee directors, coordinating the agenda for and moderating sessions of the independent and other non-employee directors, and facilitating communications among the entire Board.
Our independent directors meet in executive session at each regularly scheduled meeting of the Board, and at such other times as necessary or appropriate as determined by the independent directors. Our lead independent director presides at such executive sessions of the Board.
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CORPORATE GOVERNANCE MATTERS
Risk Oversight
As a part of its oversight function, the Board monitors management’s processes for operating our business, including risk management. The Board’s oversight of risk includes monitoring management’s work to identify risks and manage risk parameters, including those relating to enterprise, financial, operational, information security, business and reputation risks. Together with its committees, the Board ensures that any material risks relevant to us or our business are identified, appropriately considered and addressed.
Our management team is responsible for day-to-day risk management. Management’s responsibilities include identifying, evaluating and addressing potential risks that may exist at the enterprise, strategic, financial and operating levels and the development of processes for mitigating these risks, and the Board, together with its committees, oversees management in its execution of these responsibilities. At periodic meetings of the Board and its committees, and in other meetings and discussions, our management reports to and seeks guidance from the Board and its committees, as applicable, with respect to risks and other matters that could affect our business. In addition, our legal counsel provides reports of legal risks to the Board and its committees. Similarly, our chief financial officer provides reports to the Audit Committee concerning financial, tax and audit related risks. In addition, the Audit Committee receives periodic reports from management on our compliance programs and efforts, investment policy and practices.
The Board reviews the strategic, financial, operational and information security risks inherent in our business
through its consideration of the various matters presented to the Board or its committees by management for review or approval. Furthermore, each board committee regularly reviews and evaluates various aspects of enterprise risk as part of its specific functions and responsibilities delegated by the Board.
The Audit Committee considers risk in connection with its oversight of our financial review and reporting processes and regulatory and corporate compliance matters. In addition, the Audit Committee is responsible for the oversight and review of certain risk management policies, including our insurance, investment and business continuity policies, and cybersecurity and data security risks. The Compensation Committee considers risk in connection with its oversight of the design and administration of our compensation policies, plans and programs and assesses and monitors whether such policies, plans and programs have the potential to encourage excessive risk-taking. The Nominating & Corporate Governance Committee considers risk in connection with its oversight of our governance structure, policies and processes, including conflicts of interest (other than related party transactions reviewed by the Audit Committee), and oversight of our environmental, social and governance programs.
We believe that the Board’s role is consistent with our leadership structure, with our chief executive officer and management primarily responsible for enterprise risk management, and with the Board and its committees providing oversight of these efforts.
Information Security Risk Oversight and Management
The Board has delegated to the Audit Committee primary responsibility for the oversight of cybersecurity and data security risks and mitigation strategies. Mr. Kelly, an independent director and Chair of the Audit Committee, has significant information security risk oversight and management expertise, most recently as chief executive officer and president of IDX, a provider of software and services for cyber breach and identity fraud protection, from August 2017 to August 2022.
The Audit Committee provides oversight of management’s review of our information security program and risk mitigation actions, which include information security
policies, procedures, training initiatives, and both internal and external audits. The Audit Committee receives quarterly briefings on these matters by our Vice President, Information Technology & Security, who has oversight responsibility for our information security team.
As part of our thorough approach to information security management, and to continue to avoid being subject to information security breach penalties or settlements, we engage external experts to regularly test and audit our information security program in addition to conducting our own internal testing and audits.
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CORPORATE GOVERNANCE MATTERS
Director Independence
Our ordinary shares are listed on the NYSE. Pursuant to the NYSE listing standards, independent directors must comprise a majority of the Board, and each member of our Audit, Compensation and Nominating & Corporate Governance Committees must be independent. A director will only qualify as an “independent director” if he or she meets certain requirements and the Board determines that the director has no material relationship with Fabrinet (either directly or as a partner, shareholder or officer of an organization that has a relationship with Fabrinet).
The Board has reviewed the independence of each director and determined that each of Dr. Bahrami, Mr. Kelly, Ms. Knight, Dr. Levinson and Mr. Olson, representing five of our seven directors, is “independent” as that term is defined under the applicable rules and regulations of the SEC and the NYSE listing standards. In making these determinations, the Board considered the current and prior relationships that each non-employee director has with us and all other facts and circumstances the Board deemed relevant.
Audit Committee members must satisfy additional independence criteria set forth in Rule 10A-3 under the
Exchange Act. In order to be considered independent for purposes of Rule 10A-3, a member of the Audit Committee may not, other than in his or her capacity as a member of the Audit Committee, the Board, or any other board committee: (1) accept, directly or indirectly, any consulting, advisory, or other compensatory fee from us or any of our subsidiaries; or (2) be an affiliated person of us or any of our subsidiaries.
Compensation Committee members must satisfy additional independence criteria set forth under the NYSE listing standards. In order for a member of the Compensation Committee to be considered independent, the Board must consider all factors specifically relevant to determining whether a director has a relationship to us that is material to that director’s ability to be independent from management in connection with the duties of a Compensation Committee member, including, but not limited to: (1) the source of compensation of such director, including any consulting, advisory, or other compensatory fee paid by us to such director; and (2) whether such director is affiliated with us, any of or subsidiaries, or an affiliate of any of our subsidiaries.
Board Meetings and Committees
We expect directors to attend and actively participate in Board and committee meetings. Each of our incumbent directors attended at least 75% of the total number of meetings of the Board and the committees on which he or she served during fiscal 2023.
Board/Committee
No. of Meetings
in Fiscal 2023
Full Board
6
Audit
4
Compensation
4
Nominating & Corporate Governance
5
Total Meetings (average director attendance of 99%)
19
Executive Sessions (independent directors meet without management present)
6
The Board has established an Audit Committee, a Compensation Committee, and a Nominating & Corporate Governance Committee, each of which has the composition and responsibilities described below. Each committee acts in accordance with a written charter adopted by the Board. The committee charters are available in the “Investors—Governance” section of our website at www.fabrinet.com.
Audit Committee
The Audit Committee currently consists of Mr. Kelly (chair), Ms. Knight and Dr. Levinson, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC. The Board has determined that Mr. Kelly qualifies as an “audit committee financial expert” under the rules and regulations of the SEC and that each member of the Audit Committee meets the financial literacy requirements of the NYSE listing standards.
Among other responsibilities, the Audit Committee assists the Board in its oversight of (1) our accounting and financial reporting processes and internal controls, (2) the audit and integrity of our financial statements, (3) our compliance with legal and regulatory requirements, (4) the qualifications, independence and performance of our independent auditors, and (5) the performance of our internal audit function. The Audit Committee is also responsible for reviewing, approving and monitoring related party transactions, and reviewing cybersecurity and data security risks and mitigation strategies.
The Audit Committee report is included in this proxy statement on page 33.
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CORPORATE GOVERNANCE MATTERS
Compensation Committee
The Compensation Committee currently consists of Dr. Bahrami, Dr. Levinson (chair) and Mr. Kelly, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC. In addition, the Board has determined that Dr. Bahrami, Dr. Levinson and Mr. Kelly meet the requirements of the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act and the outside director definition of Section 162(m) of the Internal Revenue Code.
Among other responsibilities, the Compensation Committee (1) oversees our compensation policies, plans, benefits programs, and overall compensation philosophy, (2) assists the Board in its oversight of executive compensation, (3) administers our incentive compensation and equity compensation plans, (4) prepares an annual report on executive officer compensation for inclusion in our annual proxy statement, (5) assists the Board in its oversight of our policies and strategies related to people management, and (6) reviews and evaluates our compensation policies and practices as they relate to risk management and risk-taking incentives.
The Compensation Committee report is included in this proxy statement on page 46.
Nominating & Corporate Governance Committee
The Nominating & Corporate Governance Committee currently consists of Dr. Bahrami (chair) and Mr. Olson, each of whom is independent under the NYSE listing standards and the rules and regulations of the SEC.
Among other responsibilities, the Nominating & Corporate Governance Committee (1) assists the Board in identifying prospective director nominees, (2) recommends candidates for election to the Board at each annual meeting of shareholders, (3) reviews and recommends updates to our corporate governance guidelines, as appropriate, (4) reviews and recommends directors to serve on each board committee, (5) oversees the annual evaluation of the Board and its committees, (6) monitors and reviews matters related to succession planning for our executive officers, and (7) oversees our environmental, social and governance programs (including reviewing risks relating to corporate social responsibility and environmental sustainability).
The Nominating & Corporate Governance Committee will consider recommendations of candidates for election to the Board submitted by shareholders of Fabrinet. For more information, see “Process for Recommending Candidates for Election to the Board of Directors” below.
Attendance at Annual Meetings of Shareholders by the Board of Directors
Although we do not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders, we encourage, but do not require, directors to attend.
All of our directors attended our 2022 annual meeting of shareholders.
Contacting the Board of Directors
Shareholders and other interested parties who wish to communicate directly with our lead independent director may do so by sending an email to leadindependentdirector@fabrinet.com. Communications received at this email address are automatically routed directly to our lead independent director.
Shareholders and other interested parties who wish to communicate with the Board may do so by sending an email to board@fabrinet.com or a written communication addressed to Fabrinet, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, Attention: Board of Directors.
Our legal counsel reviews all incoming communications from shareholders and other interested parties (except for communications sent directly to the lead independent director, mass mailings, product complaints or inquiries, job inquiries, business solicitations and patently offensive or otherwise inappropriate material) and, as appropriate, routes such communications to the appropriate member(s) of the Board, or if none is specified, to the chairman of the Board.
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CORPORATE GOVERNANCE MATTERS
Share Ownership Guidelines
To further align the interests of our executive officers and members of the Board with those of our shareholders, we first adopted share ownership guidelines for our executive officers and non-employee directors in August 2012. In 2023, the Compensation Committee retained Compensia, Inc., a national compensation consulting firm, to provide independent services to assist the Compensation Committee in evaluating the competitiveness of our share ownership guidelines. As a result of this review and upon the recommendation of the Compensation Committee, the Board amended our share ownership guidelines in August 2023. Under these guidelines, our executive officers are required, and our non-employee directors are expected, to own a number of shares with a minimum value equivalent to the following:
Position
Minimum Ownership Value
Chief Executive Officer
5x annual base salary
Other Executive Officers
2x annual base salary
Non-employee directors
4x annual Board retainer
Our executive officers are required, and non-employee directors are expected, to have achieved the applicable amount of share ownership by the later of August 2023 or five years after becoming an executive officer or being appointed to the Board, as applicable, and to maintain such amount of share ownership thereafter throughout their tenure as an executive officer or non-employee director of Fabrinet.
Shares counted towards the minimum ownership levels include all shares directly or beneficially owned by the executive officer or non-employee director and any unvested, non-performance-based restricted share units held by the executive officer or non-employee director.
To satisfy these guidelines, any executive officer or non-employee director who has not reached or who fails to maintain their minimum ownership level must retain at least fifty percent (50%) of any net shares derived from the vesting or exercise of equity awards until their applicable guideline is met. “Net shares” are those shares that remain after shares are sold or netted to pay the exercise price (if any) of equity awards and applicable taxes.
At its discretion, the Compensation Committee may waive these guidelines for non-employee directors joining the Board from government, academia, or similar professions. The Compensation Committee may also temporarily suspend these guidelines if compliance would create severe hardship or prevent an executive officer or non-employee director from complying with a court order.
As of September 30, 2023, all of our executive officers and non-employee directors either met the applicable ownership threshold or were within the permitted time period to attain the required ownership.
Prohibited Transactions in Our Securities
Our officers, directors, employees and consultants are prohibited from trading in derivative securities with respect to our securities, including put and call options and other
financial instruments whose value varies with the value of our ordinary shares. This prohibition also extends to short sales.
Compensation Committee Interlocks and Insider Participation
During fiscal 2023, Dr. Bahrami, Mr. Kelly and Dr. Levinson served as members of the Compensation Committee. None of the members of the Compensation Committee is or has in the past served as an officer or employee of
Fabrinet. None of our executive officers serves as a
member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of the Board or Compensation Committee.
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CORPORATE GOVERNANCE MATTERS
Process for Recommending Candidates for Election to the Board of Directors
The Nominating & Corporate Governance Committee is responsible for, among other things, determining the criteria for membership to the Board, and recommending candidates for election to the Board. The Nominating & Corporate Governance Committee will consider recommendations from shareholders for candidates to serve on the Board. There are no differences in the manner by which the Nominating & Corporate Governance Committee evaluates nominees for director based on whether the nominee is recommended by a shareholder or a member of the Board.
Shareholder Recommendations for Board Nominees
Shareholder recommendations for candidates to the Board must be directed in writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, and must include (1) the candidate’s name, age, business address and residence address, (2) the candidate’s principal occupation or employment, (3) the class and number of shares that are held of record or beneficially owned by the candidate and any derivative positions held or beneficially held by the candidate, (4) whether and the extent to which any hedging or other transaction or series of transactions has been entered into by or on behalf of the candidate with respect to any of our securities, and a description of any other agreement, arrangement or understanding (including any short position or any borrowing or lending of our shares), the effect or intent of which is to mitigate loss to, or to manage the risk or benefit of share price changes for, or to increase or decrease the voting power of the candidate, (5) a description of all arrangements or understandings between the nominating shareholder and each candidate and any other person or persons pursuant to which the nominations are to be made by the nominating shareholder, (6) a written statement executed by the candidate acknowledging that as a director, the candidate will owe a fiduciary duty under Cayman Islands law with respect to Fabrinet and its shareholders, and (7) any other information relating to the candidate that would be required to be disclosed about such candidate if proxies were being solicited for the election of the candidate as a director, or that is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act (including, without limitation, the candidate’s written consent to being named in the proxy statement, if any, as a nominee and to serving as a director if elected).
Shareholder recommendations for candidates to the Board must also contain specified information about the shareholder proposing such nomination. For more information, please refer to our memorandum and articles of association, which may be obtained by writing to our Corporate Secretary, c/o Fabrinet USA, Inc., 4900 Patrick Henry Drive, Santa Clara, CA 95054, or by accessing Fabrinet’s filings on the SEC’s website at www.sec.gov.
Director Qualifications
The Nominating & Corporate Governance Committee will evaluate and recommend candidates for membership on the Board consistent with any criteria established by the committee. The consideration of any candidate for director will be based on the committee’s assessment of the individual’s background, experience, skills and abilities, and if such characteristics qualify the individual to fulfill the needs of the Board at that time. While the Nominating & Corporate Governance Committee has not established specific minimum qualifications or a formal diversity policy for director candidates, the committee believes that candidates and nominees should reflect a board of directors that is predominately independent and that is comprised of directors who (1) are of high integrity, (2) have broad, business-related knowledge and experience, (3) have qualifications that will increase overall board effectiveness, (4) have diverse backgrounds and perspectives, and (5) meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to Audit Committee members.
Identification and Evaluation of Director Nominees
The Nominating & Corporate Governance Committee uses a variety of methods for identifying and evaluating director nominees. The committee assesses the appropriate size and composition of the Board, the needs of the Board and its committees and the qualifications of candidates in light of these needs.
Candidates may come to the attention of the Nominating & Corporate Governance Committee through shareholders, management, current members of the Board or search firms. The evaluation of these candidates may be based solely upon information provided to the committee or may also include discussions with persons familiar with the candidate, an interview of the candidate or other actions the committee deems appropriate, including the use of third parties to review candidates.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
General
Fabrinet is committed to being a good corporate citizen in the communities in which we work and live. We maintain the highest ethical, safety, and environmental standards, and encourage our employees to assist us in meeting these standards. Because good corporate citizenship is essential to our success, we are committed to operating with integrity, contributing to the local communities surrounding our facilities, promoting diversity and inclusion in the workplace, developing our employees, and protecting the environment.
The Board, including through its committees, oversees our environmental, social and governance (“ESG”) efforts
and believes an integrated approach to our business strategy, corporate governance, and corporate citizenship creates long-term value for our stakeholders.
In 2022, we published our inaugural ESG Report, detailing our ESG practices and policies described below. The contents of our ESG Report are referenced for general information only and are not incorporated by reference in this proxy statement. We anticipate filing an update of our ESG Report in 2023.
Environmental
We are committed to the deployment of sustainable manufacturing and continuous improvement throughout our operations. We conduct our business and manage our operations globally in a manner that protects the environment and meets or exceeds all applicable environmental laws, legislation and regulations. In particular:
we maintain an Environment, Occupational Health and Safety (EHS) management system that is certified to both ISO 14001 for environmental management and ISO 45001 for occupational health and safety management;
our operations and products are compliant with European Union regulations, such as RoHS and REACH, prohibiting the use of certain chemicals unless authorized by the government or relevant agency;
we embed sustainability into our culture and reinforce a sustainability mindset among employees through trainings, workshops, competitions, and events throughout the year; and
we have the following environmental protection programs:
°
energy conservation;
°
water conservation & recycling;
°
hazardous waste reduction & safety;
°
paper use reduction & recycling; and
°
carbon emission reduction.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
Social
We are a global company with strong ties to the local communities in which we operate. We value the overall well-being of our employees and promote the vitality of community and culture by working to build an inclusive and welcoming workplace.
COVID-19 Initiatives and Practices
During the COVID-19 pandemic, we instituted broad ranging measures to protect the health and welfare of our employees, including a policy of encouraging all employees worldwide to become vaccinated. Due in particular to the relatively low vaccination rate among the
Thai population early in the pandemic, these measures included providing vaccine – free of charge – to all of our employees based in Thailand. Thanks in large part to our vaccination program, we are proud to have a worldwide employee vaccination rate of over 99%. We also provided resources and assistance to the community adjacent to our facilities in the Pathum Thani province of Thailand, including antigen testing, vaccinations, gloves, hand sanitizer, personal protective equipment and, in some cases, financial support.
In addition, we undertook many COVID-19 prevention and containment related initiatives at our facilities, including:
a requirement that face masks be worn at all times, except while eating in socially distanced cafeterias;
automation of doors and restroom faucets to decrease touchpoints;
emergency vehicle transport for employees who tested positive for the virus; and
other employee support, emotional and otherwise, where necessary.
Although we lifted our face mask mandate and relaxed some of our social distancing requirements, we are prepared to reinstitute these measures, as well as any other precautions that may be warranted, in the event of future outbreaks of COVID-19.
Other Employee Welfare Initiatives
We also have the following practices and policies:
company culture that promotes the highest standards of ethics and compliance for our business, including a Code of Business Conduct with principles to guide our employee, officer, and director conduct;
employee career guidance and counseling (with established employee development and training opportunities);
equal employment opportunity hiring practices and policies;
anti-harassment policy that prohibits sexual harassment in any form, details how to report and respond to harassment issues, and strictly prohibits retaliation against any employee for reporting harassment;
a diversity, equity and inclusion policy expressing our commitment to promoting an inclusive and diverse work environment, and the need to treat others at all times with dignity and respect;
whistleblower hotline operated by an independent third party for confidential reporting;
market competitive compensation and benefits;
prohibition of child labor;
Fabrinet Academy (our in-house education and training program for managerial, professional, and technical skills development);
employee tuition reimbursement plan;
discretionary and profit-sharing bonus plans;
employee fitness center;
“Happy Workplace” program, modeled after the World Health Organization’s Healthy Workplaces framework and the International Labor Organization’s Decent Work Agenda; and
employee motherhood and parenting training.
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ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) PRACTICES AND POLICIES
Local Community Initiatives
In addition to providing COVID-19 related support to the community adjacent to our facilities in the Pathum Thani province of Thailand, we support our local communities in the following ways:
“Maharaj” Orphanage benefactor (annual financial and administrative support, and employee volunteers); and
free elderly health checks for local community residents (Thailand).
Workplace Safety
We demonstrate our commitment to workplace safety with the following policies and practices:
compliance with the local labor laws and standards in all countries in which we operate; and
compliance with the local workplace safety laws and regulations in all countries in which we operate.
Governance
We are committed to good corporate governance, including the following:
Shareholder Engagement Initiatives
we consult with experts on the best compensation and governance practices;
we regularly attend and participate in investor roadshows and conferences; and
we reach out annually to our 25 largest shareholders, in advance of our annual shareholders’ meeting, and invite them to provide feedback on our executive compensation and corporate governance practices by participating in conference calls with Chairs of the Compensation, Audit, and Nominating & Corporate Governance Committees.
Business Practices
we have and enforce our Code of Business Conduct;
we require our suppliers to agree to conduct their business practices in accordance with our Supplier Code of Conduct;
we are a member of the Responsible Business Alliance and adhere to its code of conduct; and
we have a conflict minerals sourcing policy that supports our efforts to enable a socially and environmentally responsible global supply chain.
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PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
General
The Audit Committee has appointed PricewaterhouseCoopers ABAS Ltd. and its network firm (“PwC”) as our independent registered public accounting firm for our fiscal year ending June 28, 2024. Although ratification by shareholders is not required by any applicable legal requirements, the Board has determined it is desirable to request ratification of this appointment by our shareholders. Notwithstanding its selection, the Audit Committee, in its discretion, may appoint a new independent registered public accounting firm at any time during the fiscal year if the Audit Committee believes that such a change would be in the best interests of Fabrinet and its shareholders. If our shareholders do not ratify the appointment of PwC, the Audit Committee may reconsider the appointment.
A representative of PwC is expected to be present at the meeting, will have the opportunity to make a statement if he or she desires to do so, and is expected to be available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the ratification of the appointment of PwC as Fabrinet’s independent registered public accounting firm for Fabrinet’s fiscal year ending June 28, 2024.
Accounting Fees
The following table presents fees paid or accrued by Fabrinet for audit and other services rendered by PwC for fiscal 2023 and fiscal 2022.
Fiscal 2023
Fiscal 2022
Audit Fees(1)
$1,745,149
$1,671,166
Audit-Related Fees
Tax Fees(2)
60,723
24,814
All Other Fees(3)
7,280
9,914
Total
$1,813,152
$1,705,894
(1)
Audit Fees consist of fees for professional services provided in connection with the audit of our annual consolidated financial statements, the review of our quarterly consolidated financial statements, and audit services that are normally provided by the independent registered public accounting firm in connection with statutory and regulatory filings or engagements for the applicable fiscal year, such as statutory audits, as well as out of pocket expenses.
(2)
Tax fees consist of fees for tax compliance services.
(3)
All other fees consist of fees for accounting research software and accounting advisory services during the applicable fiscal year.
Auditor Independence
In fiscal 2023, there were no other professional services provided by PwC, other than those listed above, that would have required the Audit Committee to consider their compatibility with maintaining the independence of PwC.
Pre-Approval of Audit and Non-Audit Services
Pursuant to its charter, the Audit Committee is required to (1) review and approve, in advance, the scope and plans for all audits and audit fees and (2) approve, in advance, all non-audit services to be performed by our independent auditors. All services and fees of PwC for the periods set forth in the table above were pre-approved by the Audit Committee.
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PROPOSAL THREE: ADVISORY VOTE TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS
General
In accordance with SEC rules, we are providing our shareholders with the opportunity to vote to approve, on an advisory or non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on the compensation of our named executive officers as a whole. This vote is not intended to address any specific item of compensation or any specific named executive officer, but rather the overall compensation of all of our named executive officers and the compensation philosophy, policies and practices described in this proxy statement. We currently hold our say-on-pay vote every year.
While this advisory vote to approve executive compensation is non-binding, it will provide information to us regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when making future executive compensation decisions. The Board and the Compensation Committee value the opinions of shareholders and, to the extent there is any significant vote against the compensation of our named executive officers as disclosed in this proxy statement, will endeavor to communicate with shareholders to better
understand the concerns that influenced the vote, consider those shareholders’ concerns and evaluate whether any actions are necessary to address those concerns.
We urge shareholders to read the “Executive Compensation” section of this proxy statement, and in particular the information discussed under the heading “Executive Compensation—Compensation Discussion and Analysis,” which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives. We believe that our executive compensation program is working to ensure management’s interests are aligned with our shareholders’ interests to support long-term value creation. Accordingly, pursuant to Section 14A of the Exchange Act, you are being asked to vote “FOR” the following resolution at the Annual Meeting:
“RESOLVED, that Fabrinet’s shareholders approve, on an advisory basis, the compensation of Fabrinet’s named executive officers as disclosed in Fabrinet’s Proxy Statement for the 2023 Annual Meeting of Shareholders, pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables, and related narrative disclosures.”
Recommendation of the Board of Directors
The Board recommends a vote “FOR” the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement.
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PROPOSAL FOUR: ADVISORY VOTE TO DETERMINE PREFERRED FREQUENCY OF FUTURE ADVISORY VOTES TO APPROVE COMPENSATION OF NAMED EXECUTIVE OFFICERS
General
The Dodd-Frank Act and Section 14A of the Exchange Act enable our shareholders to indicate their preference at least once every six years regarding how frequently we should solicit a non-binding advisory vote on the compensation of our named executive officers. Accordingly, we are asking our shareholders to indicate whether they would prefer an advisory say-on-pay vote every one year, two years, or three years. Alternatively, shareholders may abstain from casting a vote. We currently hold our say-on pay vote every year.
The Board believes that conducting an annual say-on-pay vote is appropriate for Fabrinet and its shareholders at this time because compensation decisions are made annually and an annual advisory vote will allow shareholders to provide more frequent and direct input on our compensation philosophy, policies, and practices. We recognize that our shareholders may have different views as to what is the best approach for Fabrinet, and we look forward to hearing from our shareholders on this proposal.
Recommendation of the Board of Directors
The Board recommends that shareholders vote to hold future advisory votes to approve the compensation of our named executive officers every “1 YEAR.”
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AUDIT COMMITTEE REPORT
The Audit Committee assists the Board in fulfilling its responsibilities for oversight of the integrity of our financial statements, our internal accounting and financial controls, our compliance with legal and regulatory requirements, the organization and performance of our internal audit function and the qualifications, independence and performance of our independent registered public accounting firm.
Our management is responsible for establishing and maintaining internal controls and preparing our consolidated financial statements. The independent registered public accounting firm is responsible for auditing the financial statements. It is the responsibility of the Audit Committee to oversee these activities.
The Audit Committee has:
Reviewed and discussed the audited financial statements with management and with PricewaterhouseCoopers ABAS Ltd., our independent registered public accounting firm;
Discussed with PricewaterhouseCoopers ABAS Ltd. the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC; and
Received the written disclosures and the letter from PricewaterhouseCoopers ABAS Ltd. required by applicable requirements of the PCAOB regarding PricewaterhouseCoopers ABAS Ltd.’s communications with the Audit Committee concerning independence, and has discussed with PricewaterhouseCoopers ABAS Ltd. its independence.
Based upon these discussions and review, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, for filing with the SEC.
Respectfully submitted by the members of the Audit Committee of the Board of Directors.
Thomas F. Kelly (Chair)
Darlene S. Knight
Dr. Frank H. Levinson
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EXECUTIVE OFFICERS
The names of our executive officers, their ages, their positions with us and other biographical information as of October 17, 2023, are set forth below. There are no family relationships among any of our directors or executive officers.
Name
Age
Position
Seamus Grady
56
Chief Executive Officer and Director
Dr. Harpal Gill
70
President and Chief Operating Officer
Csaba Sverha
44
Executive Vice President, Chief Financial Officer
Edward T. Archer
60
Executive Vice President, Sales & Marketing
Seamus Grady. For Mr. Grady’s biography, please see “Proposal One—Election of Directors—Biographical Information” above.
Dr. Harpal Gill has served as our president since January 2011, and as our chief operating officer since March 2009. Previously, Dr. Gill was our senior vice president, operations from May 2005 to March 2009. He also has served as executive vice president, operations of Fabrinet Co., Ltd., our subsidiary in Thailand, since July 2007. From July 2003 to January 2005, Dr. Gill served as vice president of engineering and then senior vice president of engineering for Maxtor Corporation, a disk drive manufacturer. From January 1999 to July 2003, Dr. Gill served as the vice president of engineering for Read Rite Corporation, a supplier of magnetic recording heads for data storage devices. From June 1996 to October 1998, Dr. Gill served as the managing director of JTS Corp., a disk drive manufacturer. Dr. Gill also has held senior management positions with Seagate Technology and Stanton Automation. Dr. Gill earned a bachelor of science degree in mechanical engineering from Brunel University and a doctor of philosophy degree in engineering from the University of Bradford.
Csaba Sverha has served as our executive vice president, chief financial officer since February 2020. Previously, he was our vice president of operations finance from March 2018 to February 2020. From 2005 to March 2018, Mr. Sverha held various finance roles of increasing responsibility at Sanmina Corporation, an electronics manufacturing services company. During his
thirteen-year tenure at Sanmina, he assumed site level as well as regional and global finance roles, most recently serving as vice president finance & controller, Mechanical Systems Division, from December 2017 to March 2018. Prior to that, Mr. Sverha served as controller with Benetton Hungary (United Colors of Benetton). Prior to joining Benetton, Mr. Sverha held junior finance analyst and controller positions with Flex in Hungary. Mr. Sverha holds a Master’s Degree in Agricultural Economics and Management from the Szent Istvan University, Godollo Hungary (SZIU).
Edward T. Archer has served as our executive vice president, sales & marketing since January 2019. Prior to joining Fabrinet, Mr. Archer was the senior vice president of sales for the Integrated Manufacturing Services Division of Sanmina Corporation from October 2014 to December 2018. He is a thirty-year veteran of the electronics industry, with broad sales and marketing experience in technical services, products and electronic manufacturing services. He began his career in sales leadership roles at Future Electronics, Wyle Electronics and Arrow Electronics, followed by nine years at Altera Corporation (now Intel) as its regional sales director for both FPGA and ASIC products. Mr. Archer earned a bachelor of science degree in industrial technology (technical marketing) from California Polytechnic State University.
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This section contains a discussion of the material elements of compensation awarded to, earned by or paid to our principal executive officer, principal financial officer, and the other individuals included in the “Summary Compensation Table” beginning on page 47. We refer to these individuals as our “NEOs” or “Named Officers” in this proxy statement.
For fiscal 2023, our Named Officers were:
Name
Position
Seamus Grady
Chief Executive Officer (“CEO”)
Dr. Harpal Gill
President and Chief Operating Officer (“COO”)
Csaba Sverha
Executive Vice President, Chief Financial Officer (“CFO”)
Edward T. Archer
Executive Vice President, Sales & Marketing
Shareholder Engagement Following Recent Say-on-Pay Votes
We are committed to maintaining an active dialogue with our shareholders to understand their priorities and concerns, as we believe that ongoing engagement builds mutual trust and understanding. We have conducted shareholder outreach annually since 2016 and have provided shareholders with an annual say-on-pay advisory vote on the compensation of our Named Officers since 2012. Most recently, in November 2022, we invited our then 25 largest shareholders, representing approximately 75% of our shares outstanding as of October 31, 2022, to provide feedback on our executive compensation and corporate governance practices by participating in conference calls with the Chairs of our Compensation, Audit, and Nominating & Corporate Governance Committees. However, due to scheduling conflicts during the holiday season, we were unable to hold calls in 2022 with the shareholders that responded to our outreach.
We will continue our practice of shareholder outreach on our executive compensation and governance practices by again soliciting the views of institutional shareholders representing in the aggregate more than 75% of our shares outstanding as of October 31, 2023, including our 25 largest shareholders on that date. We will contact these shareholders after the filing of this proxy statement to invite them to a call before the date of the Annual Meeting.
We are very pleased that our shareholders have expressed their continued support of our compensation practices every year since 2016, with approximately 83%, 99%, 82% and 96% of the votes cast at our 2022, 2021, 2020 and 2019 annual meetings of shareholders, respectively, being voted in favor of our executive compensation as disclosed in our proxy statements for those years.
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EXECUTIVE COMPENSATION
Fiscal 2023 Compensation Decisions
In light of the results of our recent say-on-pay votes and the feedback received from shareholders, the Compensation Committee maintained a similar overall design and continued to enhance the link between executive pay and longer-term company performance when it approved in August 2022 our executive compensation program for fiscal 2023, as summarized below.
Compensation Element
Decision
Weighting of Performance Measures
Base salary
graphicCEO’s annual base salary increased by 12.2%, as compared to fiscal 2022

graphicOther NEO annual base salaries increased by between 3.0% and 15.0%, as compared to fiscal 2022
N/A
Short-term cash incentive (Fiscal 2023 Bonus Plan)
graphicTarget cash bonus opportunities (determined as a percentage of annual base salary) increased in line with increases to NEO annual base salaries  
graphicMaximum cash bonus opportunity for exceeding the target performance criteria remained at 120% of each NEO’s target bonus opportunity
graphicBonuses were payable after the end of fiscal 2023 as follows:

   50% based on achievement of a fiscal 2023 revenue metric

   50% based on achievement of a fiscal 2023 non-GAAP operating margin metric

graphicMinimum performance threshold for each metric was 90% of the target for such metric

graphicMaximum bonus opportunity was 120% of target bonus opportunity

graphicAchievement of a metric at a level between 90% and 100% of the applicable target metric would result in a payout scaled linearly from 20% to 100% of the target bonus opportunity

graphicAchievement of a metric at a level between 100% and 105% of the applicable target metric would result in a payout scaled linearly from 100% to 120% of the target bonus opportunity

graphicNo individual performance component
Long-term equity incentive (PSUs and RSUs)
graphicPSUs have challenging two-year cumulative performance and “stretch” performance goals

graphicRSUs vest annually over three years

graphicEquity grants for all NEOs weighted heavily toward performance:
66%-67% PSUs and 33%-34% RSUs
graphicThe number of PSUs earned and eligible to vest will be determined after a two-year performance period as follows:

   50% based on achievement of cumulative fiscal 2023 and fiscal 2024 revenue goals

   50% based on achievement of cumulative fiscal 2023 and fiscal 2024 non-GAAP operating margin goals

graphicAny earned PSUs will vest in full on the date the Compensation Committee certifies achievement of the performance criteria
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EXECUTIVE COMPENSATION
Positive Compensation Practices
We monitor trends and developments in compensation practices to enhance the effectiveness of our compensation philosophy and have adopted the following:
our executive officers’ cash and equity incentive compensation is subject to a claw back;
we have a practice of granting long-term equity to our executive officers that is based, in part, on Fabrinet achieving financial performance goals over a two-year performance period;
we maintain share ownership guidelines for our executive officers and directors;
our employees (including our executive officers) and directors are prohibited from margining, short-selling or pledging our securities, or trading in derivative securities;
we hold an annual shareholder advisory vote on executive compensation; and
our 2020 Equity Incentive Plan (the “2020 Plan”) contains the following features:
°
we are prohibited from instituting any program to reprice or exchange equity awards for awards with a lower exercise price without shareholder approval;
°
we are prohibited from “recycling” shares, which means that any shares subject to a grant are counted
against the share limit in the plan and may not subsequently be re-granted, even if the shares are forfeited, expired or exchanged;
°
all awards under the plan are subject to the participant’s continued employment or other service with us and vest over a four-year period, unless otherwise set forth in the award agreement;
°
we are prohibited from paying dividends with respect to an award prior to the vesting of such award;
°
we are prohibited from granting awards that may vest or become exercisable earlier than one year after such award is granted, except that awards up to a maximum of five percent (5%) of the total shares reserved and available for grant and issuance under the plan may be granted without regard to such minimum one year vesting requirements; and
°
we are prohibited from accelerating the vesting of an award before the one year anniversary of the award’s grant date, except in connection with death, disability, termination of employment, reaching retirement age or an event that triggers the plan’s provisions relating to assumption and termination of awards.
Executive Compensation Program Objectives and Overview
Our executive compensation programs are intended to achieve three fundamental objectives: (1) attract, retain and motivate qualified executives; (2) hold executives accountable for short-term and long-term performance; and (3) align executives’ interests with the interests of our shareholders. In structuring and designing our executive compensation programs, we are guided by the following basic philosophies:
Competition. We should provide competitive compensation opportunities with respect to our industry so we can attract, retain and motivate qualified executives.
Alignment with Shareholder Interests. A substantial portion of compensation should be contingent on our performance for our shareholders, to align the interests of executives with the interests of our shareholders and to hold the executives accountable for our performance.
The material elements of our executive compensation programs for our Named Officers include a base salary, short-term cash incentive awards and long-term equity incentive awards. In addition, our Named Officers may participate in our 401(k) plan and employee benefit programs on substantially the same terms as our other employees. Our Named Officers also are entitled to certain perquisites and personal benefits and, in some cases, are entitled to severance benefits upon certain terminations of their employment with us. We believe each element of our executive compensation program helps us to achieve one or more of our compensation objectives. Taken together, the compensation elements are intended to provide a total compensation package for each Named Officer that is competitive.
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The table below lists each material element of our executive compensation program and the compensation objective or objectives it is designed to achieve.
Compensation Element
Compensation Objectives Designed to be Achieved
Base salary
graphicAttract, retain and motivate qualified executives.
Short-term cash incentives
graphicAlign executives’ interests with those of shareholders;

graphicHold executives accountable for our performance; and

graphicAttract, retain and motivate qualified executives.
Long-term equity incentives
graphicAlign executives’ interests with those of shareholders;

graphicHold executives accountable for our performance; and

graphicAttract, retain and motivate qualified executives.
Perquisites and personal benefits
graphicAttract, retain and motivate qualified executives.
Severance and other benefits upon termination of employment
graphicAttract, retain and motivate qualified executives.
Role and Authority of the Compensation Committee
The Compensation Committee currently consists of Dr. Levinson (chair), Dr. Bahrami and Mr. Kelly, each of whom is “independent” within the meaning of NYSE rules. In addition, the Board has determined that Dr. Levinson, Dr. Bahrami and Mr. Kelly meet the requirements of the non-employee director definition of Rule 16b-3 promulgated under the Exchange Act and the outside director definition of Section 162(m) of the Internal Revenue Code. Dr. Levinson has served as chair of the Compensation Committee since November 2011, Dr. Bahrami has served as a member of the Compensation Committee since May 2019, and Mr. Kelly has served as a member of the Compensation Committee since December 2015. No Compensation Committee member is a former or current officer or employee of Fabrinet or any of its subsidiaries. The Compensation Committee meets at least quarterly, and members of the Compensation Committee serve at the discretion of the Board.
The Compensation Committee is responsible for overseeing our compensation policies and goals and administering our equity compensation plans and executive incentive plan, including approving target and actual bonuses under our executive incentive plan. Additionally, the Compensation Committee is responsible for reviewing and approving the compensation of our chief executive officer and other Named Officers. The Compensation Committee’s role is detailed in its charter, which is available in the “Investors—Governance” section of our website at www.fabrinet.com.
Pursuant to its charter, the Compensation Committee may delegate its authority to grant awards under Fabrinet’s incentive compensation or other equity-based plans, except with respect to awards to executive officers and directors. The Compensation Committee has not delegated any of its authority with respect to equity award grants under the 2020 Plan or with respect to any component of the compensation of our Named Officers.
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Role of the Independent Compensation Consultant
The Compensation Committee has the authority, in its sole discretion, to engage the services of outside consultants to assist it in making decisions regarding the establishment of our compensation programs and philosophy. The Compensation Committee also may obtain advice and assistance from internal or external legal, accounting or other advisors. For fiscal 2023, the Compensation Committee retained Compensia, Inc. (“Compensia”), a national compensation consulting firm, to provide independent compensation consulting services. If requested by the Compensation Committee, a representative of Compensia attends meetings of the Compensation Committee. However, the Compensation Committee did not request Compensia to attend any of its meetings held during fiscal 2023.
Although Fabrinet pays Compensia’s fees, Compensia reports directly to the Compensation Committee, and the Compensation Committee retains the authority to hire or fire Compensia and any other consultant or advisor.
Compensia does not provide any services to us other than the services provided to the Compensation Committee. The Compensation Committee has assessed the independence of Compensia taking into account, among other things, the factors set forth in Exchange Act Rule 10C-1 and corresponding listing standards of the NYSE, and has concluded that no conflict of interest exists with respect to the work that Compensia performs for the Compensation Committee.
During fiscal 2023, Compensia provided the Compensation Committee with a blend of peer group proxy data and other market data, as discussed below, to assist the Compensation Committee in evaluating the competitiveness of our executive compensation and non-employee director compensation programs. Compensia also advised the Compensation Committee on general compensation trends in the industry among similarly situated companies.
Role of Executive Officers in Compensation Decisions
In carrying out its responsibilities, the Compensation Committee works with members of our management team, including our CEO and CFO. Typically, our management team assists the Compensation Committee in the execution of its responsibilities by providing information on corporate and individual performance and management’s perspective and recommendations on compensation matters.
Our CEO made recommendations to the Compensation Committee regarding fiscal 2023 executive compensation
matters. At the request of the Compensation Committee, our CEO and CFO occasionally participate in meetings of the Compensation Committee, except with respect to decisions involving their own compensation. While the Compensation Committee solicits the recommendations and proposals of our CEO and CFO with respect to executive compensation matters, these recommendations and proposals are only one factor in the Compensation Committee’s decision-making process.
Fiscal 2023 Peer Group and Other Market Data
To assist the Compensation Committee in evaluating whether our executive compensation practices for fiscal 2023 were competitive and consistent with the Compensation Committee’s executive compensation program objectives, Compensia provided the Committee with compensation data (the “Market Data”) consisting of publicly available proxy statement data from our fiscal 2023 peer group.
The Compensation Committee used the Market Data to compare our Named Officers’ base salary, target cash incentive opportunity, target total cash compensation, equity compensation and total direct compensation against the 25th, 50th and 75th percentiles of the same categories of compensation for executives holding positions comparable (where possible) to the positions of our Named Officers. However, the Compensation Committee does not benchmark or apply specific formulas
to determine adjustments to our Named Officers’ base salary, target cash incentive opportunity, target total cash compensation, equity compensation or total direct compensation.
The specific criteria for selection into our peer group are set annually by the Compensation Committee. When our peer group is reviewed each year, companies may be removed for failure to meet the selection criteria, or new companies may be added as necessary to ensure a significant sample size of companies. In selecting a peer group, the Compensation Committee considers companies that, in its view, compete with us for talent and have financial or other organizational metrics generally similar to ours. Accordingly, our peer group includes a blend of businesses classified as providing electronic equipment, instruments or components, communications equipment, or electronic manufacturing services.
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The selection criteria for our fiscal 2023 peer group included 12-month trailing revenue and market capitalization. Our 12-month trailing revenue and market capitalization were in the 48th and 66th percentiles, respectively, of our fiscal 2023 peer group at the time the Compensation Committee selected the group. Compensia gathered data on the compensation practices of the companies in our fiscal 2023 peer group through publicly available information, where available.
Our fiscal 2023 peer group, as approved by the Compensation Committee and set forth in the table below, was the same as our fiscal 2022 peer group, except for the removal of three companies (Coherent, Inc., Kimball Electronics, Inc., and Ribbon Communications Inc.) and the addition of five companies (Advanced Energy Industries, Inc., IPG Photonics Corporation, Methode Electronics, Inc., MKS Instruments, Inc., and TTM Technologies, Inc.).
Fiscal 2023 Peer Group
Advanced Energy Industries, Inc.
Infinera Corporation
Methode Electronics, Inc.
TTM Technologies, Inc.
Belden Inc.
IPG Photonics Corporation
MKS Instruments, Inc.
Viasat, Inc.
Benchmark Electronics, Inc.
Itron, Inc.
National Instruments Corporation
Viavi Solutions, Inc.
Celestica Inc.
Knowles Corporation
OSI Systems, Inc.
Vishay Intertechnology, Inc.
Ciena Corporation
Littelfuse, Inc.
Plexus Corporation
Coherent Corporation (f/k/a II-IV Incorporated)
Lumentum Holdings Inc.
Sanmina Corporation
 
Executive Compensation Program Elements
Base Salaries
We provide a base salary to our executive officers and other employees to compensate them for services rendered on a day-to-day basis. Following the end of each fiscal year, the Compensation Committee typically reviews and determines whether to adjust executive base salaries on the basis of each executive officer’s level of responsibility, qualifications, experience, past performance and expected future contributions. The Compensation Committee also considers whether executive base salaries are competitive as compared to salary practices gathered from the Market Data.
In fiscal 2023, the Compensation Committee reviewed the salary component of the Market Data and considered each executive officer’s past performance and expected future contributions, changes in each executive officer’s
responsibilities and organizational changes. As a result of its review, the Compensation Committee approved fiscal 2023 annual base salaries for Named Officers as set forth in the table below.
The Compensation Committee determined it was appropriate to increase Mr. Grady’s fiscal 2023 annual base salary by approximately 12.2% in recognition of his performance during fiscal 2022 and as a retention tool. The Compensation Committee determined it was appropriate to increase Mr. Sverha’s fiscal 2023 annual base salary by approximately 15.0% to bring his annual base salary closer to the 75th percentile of the Market Data, in recognition of his performance during fiscal 2022, and as a retention tool.
Name
Fiscal 2022
Annual Base Salary
Fiscal 2023
Annual Base Salary
% Change
Seamus Grady
$1,025,000
$1,150,000
12.2%
Dr. Harpal Gill
$1,010,000
$1,040,300
3.0%
Csaba Sverha
$500,000
$575,000
15.0%
Edward T. Archer
$460,000
$500,000
8.7%
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Short-Term Cash Incentive Awards
Our annual cash incentive plan provides our Named Officers with the ability to receive cash incentive awards based on company financial performance, with performance targets and payouts under the plan determined each fiscal year as follows:
payouts are based 50% on achievement of a fiscal year revenue metric and 50% on achievement of a fiscal year non-GAAP operating margin metric, with achievement of each financial metric considered independently from the other;
performance targets are equal to our annual operating plan targets, which the Compensation Committee believes should be realistic and achievable;
the minimum performance threshold for each metric is 90% of the target for such metric;
the maximum bonus opportunity is 120% of the target bonus opportunity;
achievement of a financial metric at a level between 90% and 100% of the applicable target financial metric results in a payout scaled linearly from 20% to 100% of the target bonus opportunity for that metric; and
achievement of a financial metric at a level between 100% and 105% of the applicable target financial metric would result in a payout scaled linearly from 100% to 120% of the target bonus opportunity for that metric.
By basing a substantial portion of our Named Officers’ total cash compensation on achievement of financial goals designed to drive shareholder value, our annual
cash incentive plan is intended to align our Named Officers’ interests with the interests of our shareholders.
In August 2022, the Compensation Committee approved our cash incentive plan for fiscal 2023 (the “Fiscal 2023 Bonus Plan”) and determined the target bonus opportunity for each Named Officer under the plan after considering the Market Data provided by Compensia, evaluated against other criteria, including the Named Officer’s functional responsibilities and ongoing duties.
The revenue and non-GAAP operating margin targets under the Fiscal 2023 Bonus Plan were the same as the corresponding targets under our fiscal 2023 annual operating plan. The Compensation Committee chose revenue and non-GAAP operating margin performance goals because it believes that these goals constitute important, key performance metrics that significantly can impact our business success. Achievement of a target bonus payout under the Fiscal 2023 Bonus Plan would have required high levels of corporate performance that the Compensation Committee believed were realistic and achievable. In structuring the Fiscal 2023 Bonus Plan, the Compensation Committee also provided for a maximum bonus opportunity equal to 120% of a Named Officer’s target bonus opportunity because the committee determined that it was appropriate to incentivize and reward financial performance that exceeded our annual operating plan targets.
The achievement targets and actual year-end attainment under the Fiscal 2023 Bonus Plan were as follows ($ in millions):
Performance Metric